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The Challenge to Provide Energy for All:

What does it Mean for the Poor

by: Jiwan Acharya, Asian Development Bank1

Background Paper for Conference on “The Environments of the Poor”, 24-26 November 2010,
New Delhi

SUMMARY

1. Energy powers human development and the inability to access modern energy
continues the cycle of poverty. There are an estimated 1.4 billion people around the world
without access to electricity; 800 million of them are in Asia and the Pacific. There are 2.7
billion people who depend on the use of traditional biomass such as wood, charcoal or
animal dung, for their heat and light; 1.9 billion of those people are in Asia and the Pacific.

2. Without energy, human development targets, including the UN Millennium Development

Goals cannot be met. Access to modern energy facilitates economic development, it allows
for education, modern health services and gender equality by easing household burdens.
For the purposes of this paper, the focus is on the many environmental benefits of modern
energy.

3. Modern household energy displaces burning of traditional biomass, which is very often
inefficient and polluting. Many biomass fires are indoors, thereby degrading indoor air quality
and adversely affecting the health of the household, especially women and children who
tend to the hearth. At a large scale, the dependency on biomass contributes to deforestation
as remaining forests are tapped for fuel wood. Through their black carbon emissions, these
millions of biomass fires contribute to climate change.

4. Providing access to modern energy is a thrust of ADB’s Energy Policy and ADB’s long
term goals of inclusive, environmentally sustainable development. With technological
advancements, ADB is supporting renewable energy systems as a way to provide for the
power needs of the poor without increasing their carbon footprint. Helping the poor onto a
low carbon path of development from the outset improves the ability of the rest of Asia to
transition fully to a green economy and safeguard the region’s energy security while
mitigating climate change.

1
Climate Change Specialist, Regional and Sustainable Development Department. The views
expressed in this paper are of those of the author and do not necessarily reflect the views
and policies of ADB.
THE CHALLENGE OF ENERGY POVERTY
5. Energy poverty must be confronted to fight poverty as a whole. When energy and
poverty are mentioned, a certain image of a poor household springs to mind. There is the
scene of a dark room, perhaps in a rural area, lit by flickering candle light or a hanging
kerosene lamp. The cooking is done over an open flame and the smoke of the fire rises
around the cookpot. This is a common image because it is a true one and a sadly prevalent
one. In developing Asia today, 800 million people in have no access to basic electricity
services, and more than 1.9 billion people in Asia and the Pacific depend on burning
traditional biomass, such as wood, charcoal or animal dung, for cooking and heating (IEA
2010).
6. There is no agreed upon exact definition of energy poverty but there is an
agreement that energy in all its forms eases the burden of the poor. Energy is heat and
light, it is mechanical power that can be used to lift, haul and transport. Energy is the power
used to mill grains, to plow fields, and to pump water to homes and through irrigation
channels. Energy does not permit work, but it does make it more efficient. Water can be
pumped up from the deep well by hand, or it can be drawn by an electric motor. It can be
borne home on human shoulders or through pipes. Food can be cooked over an open flame
or over a natural gas burner but one of those ways fills a house with smoke and soot that
most directly affects the women and children of the household who tend such fires. The
World Bank, on a study on energy poverty in Bangladesh (World Bank 2010) suggested a
few indicators to determine energy poverty, including electrification rates, end use-to-total
energy ratio and energy expenditure as a percentage of income. In their call for universal
access, the UN AGECC recommended as a starting point for minimum energy services to
be the IEA figure of 100kWh per person per year (UN 2010).
7. Though targets may vary, development agencies agree that energy is essential for
development. In its statement this year, the UN Secretary General’s Advisory Group on
Energy and Climate Change wrote, “While there is no goal on energy, it is central to meeting
the other MDGs, especially those concerning poverty and hunger, universal education and
environmental sustainability.” (UN 2010) Multilateral development agencies have long
supported projects to increase access, because of the link between power and human
development. Historically, this was mainly support through grid extensions. As national
infrastructure has reached its geographic limits with millions still unserved, the focus has
shifted to providing decentralized energy solutions.
8. Access to energy has life changing benefits for the poor. Energy is not out of reach
of the poor, modern energy is what they lack access to. Globally, the poor pay $38 billion a
year for fuel based lighting (UN 2010) in the form of primitive fuels. The poor also pay in the
time spent gathering fuel for their daily needs. They pay in terms of their health with an
estimated 1.6 million women and children dying each year as a result of indoor smoke
inhalation (WHO 2010).
 9. However, modern power does not come cheaply or easily to many communities.
The high initial cost of connection to the power grid keeps many households within a service
area unconnected. Temporary subsidies are often required. But in the experience of ADB
and other development institutions, large and small, is that when priced within reach of the
poor, modern power is an expense the poor are both willing and able to pay for due to
increased quality and reliability.

THE ENVIRONMENTAL CONSEQUENCES OF ENERGY POVERTY

10.The lack of modern energy leads the poor to damage their environment. The
clearest example we have of this relates to the use of biomass. Without modern fuels, many
of the poor are dependent on burning biomass for lighting, heat, and most commonly,
cooking purposes. Biomass includes fuelwood, and in many cases, this wood is sourced
from the surrounding forests. In many countries forested areas are already depleted, and
the poor’s needs exacerbate this problem.
11.The negative effects of deforestation are well known, and widespread. Soil erosion
increases, which can lead to a higher risk of flooding, and in extreme cases, lead to
landslides. Water resources are also at risk when the forests area are also watersheds.
12.Biomass dependency is widespread in Asia and the Pacific with an estimated 1.9
billion people in the region still using traditional biomass (IEA 2010). In the Philippines,
over 14% of the primary energy needs of the 90 million people living in the Philippines
comes from biomass. Most is used for household cooking by the rural poor. Inefficient
production systems and inefficient charcoal stoves mean that only about 5% of the wood
energy is recovered as useful heat for cooking. This creates high demand for more fuel,
leading to greater pressure on forests.
13.In Cambodia, only 8% of the population have access to modern fuels (IEA, 2009).
More than 80% of the primary energy supply comes from biomass, either fuel wood or
charcoal, almost 100% of this energy is used by households. Some 84 % of Phnom Penh
households were found to use either firewood or charcoal mostly harvested in rural areas
and transported on trucks using imported diesel.
14.The energy supply of Timor-Leste is largely dependent on biomass resources. It is
estimated that more than 90% of all primary energy input is based on solid biomass, the
vast majority in the form of fuel wood used for cooking, baking and other heat processes
(such as pottery and brick making). Over 95% of all Timorese households – in rural as well
as in urban areas - use wood as their principal cooking fuel.
15.About three-quarters of the population of Indonesia remain heavily reliant on solid
fuels or biomass. Traditional biomass supplies 72% of the household energy needs for
cooking, with the remaining 28% met by kerosene.
16.Energy poverty also has larger scale effects on the environment and human
health. Biomass resources usually have a high moisture content and open fires are not
efficient. This creates dense black smoke that is poses a risk to health when it is
 concentrated indoors. The dense smoke is also rich with ‘black carbon’ that enters the
atmosphere. Black carbon has been implicated as a major factor in climate change, perhaps
the second greatest factor after CO2 (Pew Center on Global Climate Change, 2010)2. Black
carbon is produced by the incomplete combustion of fossil fuels, which describes biomass
burning as well as the use of diesel and kerosene. Black carbon is recognized as an air
pollutant that affects human health.
17.Unlike CO2, which can remain in the atmosphere for decades, black carbon only
remains in the atmosphere for weeks. Cutting its emissions will result in rapid results in
terms of greenhouse gas emissions. Though diesel engines are the primary source of black
carbon globally, cook stoves are a major source of it, especially in Asia and the Pacific.
Addressing this will be a contribution to the ongoing fight against climate change.

IMPROVING ACCESS TO ENERGY

18.Improving the environments of the poor can be accomplished by creating access
to modern energy. The International Energy Agency (IEA) has stated that delivering
universal access to energy at a basic minimum threshold would increase global greenhouse
gas emission levels by only 1.3% above current levels. The IEA has gauged this basic
threshold to be 100kWh per person per year (UN AGECC 2010).
19.The rise in emissions as universal access is provided assumes that energy
demand is being met through the current power mix, which is dominated by fossil
fuel generation. Initiatives for clean energy access and supply and demand side energy
efficiency would lower these emission levels. ADB’s Energy Policy has already stated that
ADB will seek to support clean energy projects in as many ways and sectors as possible.
This has been made easier with technological advancements. Clean energy as an off-grid
energy solution has become much more feasible and affordable. To paraphrase from a
public statement from members of the AGECC, the obstacles to energy access are no
longer technical obstacles.
20.Secondly, providing access to modern energy through clean sources creates a
new development paradigm for the poor. Clean energy powers low carbon development,
leading to a smaller carbon footprint and lowered greenhouse gas emissions overall. By
supplying unserved communities through clean energy, the need for them to tap into
conventional, fossil fuel based power sources decreases.
21.Biomass burning can be addressed by improving efficiency or outright
displacement. The solution of improved cook stoves that burn wood fuel much more
efficiently, has been used in multiple countries with well recorded effects. Black carbon
emissions have been reduced and the air quality of communities and households has
improved. Savings due to fuel efficiency are also a benefit. A step beyond more efficient
stoves are interventions that completely displace the burning of biomass by providing

2
 access to modern clean burning fuels. Provided the poor have access to a supply and it is
priced within their means, the poor will benefit more from LPG or biogas sources of energy.

ADB’S ENERGY FOR ALL INITIATIVE

22.ADB’s 2009 Energy Policy aims to address energy access and the Energy for All
Initiative has been established to increase ADB’s investments in the sector. The
initiative has had marked success since its inception in 2008. 2010 is seeing the biggest
jump in households connected to electricity and to modern fuels. With two months left of the
year, household connection has surpassed the cumulative total of 1.27 million for the last
seven years (2003-2009), with 1.45 million households to be provided access to electricity
and modern fuels. Under this Initiative, ADB has launched a regional partnership-Energy
for All Partnership-in 2009 to provide access to modern forms of energy for 100 million
people in Asia by 2015.
23.From 2003 to Q3 2010, ADB invested $890 million in projects that had a total of
$370 million worth of access to off-grid electricity and lighting components. This gives
ADB an annual investment in off-grid power of close to $50 million. ADB also supported
access to on-grid electricity and lighting during the same period with $140 million.
24.Energy for All has supported projects that cover the spectrum of access, covering
modern cooking fuels, renewable energy and grid extension. For example, the Sungas
LPG Project aims to build an LPG distribution network in Afghanistan. ADB is investing up to
$8 million for a 25% stake in Sungas LLC. Sungas will build LPG distribution centers in 6
Afghan cities and the increased ability of Afghans to access LPG will lead to 230,000
households switching from solid fuels to LPG by 2019.
25.In Vietnam, ADB provided a $19 million loan component for a biogas project. This
loan component will offer a line of credit to local banks to finance up to 40,000 home biogas
systems that will go to small livestock farmers. These biogas systems will convert livestock
waste into methane for home use as power and a cooking fuel. The loan component also
allows for an output-based subsidy for 20,000 households as well. This project scales up an
existing biogas program and ADB aims to replicate this project in Lao PDR and Bhutan.
26.Rural electrification is one of the most direct ways to bring modern power to the
poor. In Viet Nam, ADB has supported a $151 m loan that will expand the national electrical
grid to unserved areas and develop renewable energy resources in areas where the grid
extension is not feasible. This project will electrify around 1000 villages through the grid
while constructing 5-10 mini-hydro subprojects in off-grid mountainous areas. In total, it will
connect 105,000 households to modern power. Electrifying rural areas not only provide
access to electricity but also improves overall livelihood. In a recent study done by ADB’s
Independent Evaluation Department on two rural electrification projects in Bhutan, it is found
that electrified households enjoy a better quality of life and most of the economic, social, and
environmental outcomes are better in electrified households than in unelectrified households
due to electricity (ADB 2010).
CONCLUSION
27.The environments of the poor are shaped by their ability to access modern
energy. The inefficient and unsustainable use of biomass can denude forests and pollute
the air. At large scales, these effects can be devastating to human wellbeing and drive
people deeper into poverty. Yet the cycle can be broken as better options exist and are
within reach.
28.Not only does modern power support human development, but technology has
reached the point where the poor can tap into their environment for power. Small scale
solar, wind, biogas and hydro systems offer low carbon options to meeting energy demands.
Not only does this teach stewardship of local resources but it places the poor on a path of
low carbon development, reducing their need to tap into high carbon power sources.
29.Although we rightly focus on the large scale relationships of high carbon energy
sources and the global environment due to the threat of climate change, we cannot
afford to ignore those who do not have energy. The ties between human development
and energy are clear. The low carbon future and green economy that we seek to create
must be inclusive for all, and those among us with the least must have the power to make
their lives better.
LITERATURE
ADB, Energy for All Initiative. http://www.adb.org/Clean-Energy/energyforall-initiative.asp
ADB, 2010. Asian Development Bank’s Assistance for Rural Electrification in Bhutan-Does
Electrification Improve the Quality of Rural Life? Independent Evaluation Department, Asian
Development Bank, Manila, 2010.
International Energy Agency, World Energy Outlook 2010: Special Excerpt “Energy Poverty”,
2010
Pew Center on Global Climate Change, What is Black Carbon?
http://www.pewclimate.org/global-warming-basics/blackcarbon-factsheet, 2010
United Nation Secretary General’s Advisory Group on Energy and Climate Change (AGECC),
Energy for a Sustainable Future, 2010
World Health Organization, Indoor air quality and pollution,
http://www.who.int/heli/risks/indoorair/indoorair/en/index.html, 2010